Key Provisions: Financial Intelligence Centre Amendment Bill

15 Oct 2016

PBM

South Africa’s Financial Intelligence Centre Amendment Bill has caused serious political ructions that have seen an objection being lodged with President Jacob Zuma.

Lodged by the Mzwanele Manyi led Progressive Professionals Forum, the opposition to the FIC Amendment Bill can to some extent be connected to the full blow war between the country’s finance minister Pravin Gordhan and the Gupta family.

The issues and the principles around the FIC Amendment Bill and those in the Gordhan/Gupta war seem to be very much very much aligned as centred around monitoring financial flows.

Opposition to the bill has been captured as a concern that its stipulations will be used to suppress emerging black business. That view has been expressed by the Black Business Council.

The FIC Amendment Bill comes on the back of globalised initiatives to combat fraud and corruption and mainly money laundering pushed for criminal and terrorist activity. Banks are at the centre of the bill in as bounded by the Prevention of Organised Crime Act, the Prevention and Combatting of Corrupt Activities Act, the US Foreign Corrupt Practices Act and the UK Bribery Act.

Beneficial Owner
A “beneficial owner” is defined as, in respect of a judicial person, the natural person who, independently or together with a connected person, owns or controls the juristic person directly or indirectly, including through bearer share holding.

Continued Due Diligence
Accountable institutions will be required to undertake ongoing customer due diligences in order to establish the identity of the beneficial owner, the customer’s identity, the purpose and intended nature of the business relationship, and to keep information relating to the business relationship up to date and to scrutinise transactions in order to establish if the transactions are consistent with the accountable institution’s knowledge of the customer and the customer’s business, and to identify anomalies in transactions patterns.

Prominent Persons
The Bill has introduced other concepts into the Financial Intelligence Centre Act 38 of 2001 (FIC Act) which relate to prominent persons, such as domestic and foreign prominent persons. These classifications are intended to aid accountable institutions to properly identify their clients and do not entail a presumption that these prominent persons are more likely to be involved in any criminal activity.

FIC Enforcement Mechanisms
The FIC may initiate the analysis of suspicious transactions based on information in its possession or information disclosed to it by accountable institutions. Further, the Bill amends section 45 of the FIC Act to provide for the requirement of a warrant in order for an inspector to conduct inspections for the purpose of determining compliance with the FIC Act.

Risk Management and Compliance Programme
The concept of a “Risk Management and Compliance Programme” has been included in the FIC Act. The Bill places a responsibility on accountable institutions to develop, document, maintain and implement AML and CFT Risk Management and Compliance Programmes. Accountable institutions are obliged to ensure that their employees are trained to comply with the FIC Act and their respective Risk Management and Compliance Programmes, for which the board of directors or the senior management of the accountable institution are responsible.

These key provisions were listed in a statement made by a South African law firm Webber Wentzel.